The 46-year-old had been away from the club since January this year because of a "stress-related illness".
However, in a short statement on the club's official website, the board confirmed that they have made the decision "based purely on footballing grounds".
"The decision is based purely on footballing grounds, after falling from playoff contenders last season to just escaping relegation this time around, and early exits in all three cup competitions," read the statement.
"Everyone at Plainmoor would like to thank Martin for his work over the last two years and we wish him every success in the future."
Alan Knill had been in charge of the club in Ling's absence and has been installed as the favourite to be given the job on a permanent basis.